How Markets Work - Softcover
Mainstream neo-classical economics focuses on already attained states of equilibrium. It is silent about the processes of adjustment to equilibrium; Human action consists of ''grappling with an essentially unknown future'', not being confronted with clearly specified objectives, known resources and defined courses of action as mainstream theory assumes; Critics of the market economy find ammunition in neo-classical theory: they ''merely need to tick off the respects in which real world capitalism departs from the requirements for perfectly competitive optimality''; The theory of entrepreneurial discovery allows economists to escape from the ''analytical box'' in which ''choice'' simply consists of computing a solution implicit in given data; An entrepreneurial act of discovery consists in ''realising the existence of market value that has hitherto been overlooked''. Scope for entrepreneurial discovery occurs in a world of disequilibrium -- which is quite different from the equilibrium world of mainstream economics where market outcomes are foreordained; Entrepreneurial discovery explains why one price tends to prevail in a market. Though new causes of price differences continually appear, entrepreneurs exploit the resulting profit opportunities and produce a tendency towards a single price; Only with the introduction of entrepreneurship is it possible to appreciate how markets work. Without entrepreneurship, there would be no market co-ordination; So-called ''imperfections'' of competition are often ''crucial elements in the market process of discovery and correction of earlier entrepreneurial errors''; Advertising expenditures, for example, are means of alerting consumers to ''what they do not know that they do not know''. Anti-trust laws may hamper market processes and prevent competitive entry to markets; so. Entrepreneurial profit, far from generating injustice, is a ''created gain''. It is not ''sliced from a pre-existing pie ...it is a portion which has b[...]
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- PublisherInstitute of Economic Affairs
- ISBN 10 0255366760
- ISBN 13 9780255366762
- BindingPaperback
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